Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 33

INSURANCE CONTRACTS (IFRS 4)

1. OBJECTIVE

1.1 This Standard is the first phase of guidance from the International Accounting Standards Board (IASB) on accounting for insurance contracts and aims at improving the disclosures for insurance contracts and recognition and measurement practices. The Standard was issued in March 2004, in time for the adoption of International Financial Accounting Standards (IFRS) by listed companies throughout Europe and elsewhere in 2005 since there was virtually no guidance from the IASB on the subject at that time.

1.2 It is expected that the second phase of the IASB’s Insurance Project will be more comprehensive in scope and will cover other aspects of insurance accounting not yet dealt with by this Standard.

2. SYNOPSIS OF THE STANDARD

This Standard, which applies to insurance contracts, including reinsurance contracts, that an entity issues and to reinsurance contracts that it holds, is summarized next.

2.1 This Standard does not apply to other assets and liabilities of an insurer, such as financial assets and financial liabilities within the scope of International Accounting Standard (IAS) 39, Financial Instruments: Recognition and Measurement. It also does not address accounting by policyholders.

2.2 In case an issuer of financial guarantee contracts has previously treated such contracts as insurance contracts and has used accounting applicable to insurance contracts, the issuer may elect to apply either International Accounting Standard ...